Deloitte Report: strong economic benefits from energy efficiency retrofits for low-income homes

6 October 2021

New analysis by Deloitte Access Economics finds that investing in low-emission and energy efficiency retrofits to low-income homes, delivering vital health and social gains, would generate tens of thousands of jobs and add billions of dollars to our economy, with sustained and ongoing productivity improvements.

The recent Intergovernmental Panel on Climate Change report found climate change is already wreaking havoc around the world and in Australia, and worse is to come. ACOSS urges Federal and State/Territory governments to adopt energy efficiency measures for low-income homes that will reduce CO2 emissions, help people struggling in poverty and boost the economy.

ACOSS CEO Dr Cassandra Goldie said, “Investment in energy productivity retrofits to low-income homes is one of the smartest investments governments could make to simultaneously save lives, reduce poverty, tackle the climate crisis and deliver tens of thousands of jobs across the country.

“The energy efficiency of Australian homes is so poor that millions of people on low-income, especially those that rent, are getting sick or dying because they can’t afford energy bills and are unable to install retrofits to keep their home warm in winter or cool in summer. The situation is now extreme with so many people locked down and hit hard by the pandemic. As we head into another summer of heatwaves, governments must deliver energy efficiency for people struggling the most.

“This Deloitte report now shows without doubt, that every dollar spent on targeted energy efficiency programs helps people most in need and creates jobs. In addition, every dollar saved on energy bills for a person on low income is spent back into the economy to create more jobs.”

ACOSS commissioned Deloitte Access Economics to analyse the economic benefits of providing a one-off investment in energy efficiency measures and/or rooftop solar to 1.8 million low-income homes across public housing, community housing, low-income homeowners and low-income rental properties. The original proposal – National Low-income Energy Productivity Program (NLEPP) – was endorsed by 50 community, health, environmental and business organisations last year.

The analysis by Deloitte finds that the NLEPP could create 22,000 full-time equivalent jobs needed to deliver the Program. In addition, the Program could create an additional 1,800 jobs by delivering energy efficiency and solar to low-income homes specifically and could deliver an additional 4.9 billion in gross domestic product. The report finds that delivering a national retrofit program, with its explicit targeting of Australia’s most financially disadvantaged households is projected to deliver a 17% higher economic impact than an equivalent program delivered across a broader base.

Author of the report, Cedric Hodges, said “Investing in retrofits for low-income homes not only provides direct employment benefits of 22,000 jobs but has broader ongoing improvements for the Australian economy, making it a smart investment.

“Retrofitting low-income homes to improve their energy efficiency and reduce emissions can provide significant ongoing bill savings, which leads to greater spending back into the economy, especially to service-based sectors that continue to be hardest hit by COVID pandemic.

“Importantly, the additional GDP and employment gains complement other effects low-income housing retrofits. This includes benefits from reduced ‘energy bill stress’ and reduced costs to the public sector in managing health issues arising from poorly heated or cooled housing.”

Kellie Caught, ACOSS Program Director – Climate and Energy said “Government investment would create new jobs in cities and the bush that otherwise wouldn’t be created and improve people’s lives.

“This is a nation-building program that will have sustained and profound social, health and economic benefits for years to come.”

Download Deloitte Access Economics report

National Low-income Energy Productivity Program (NLEPP) update here

Note: The National low-income energy productivity program (NLEPP) proposal includes the following five components (Deloitte analysis covers 1-4):

  1. Public housing– Federal and state/territory governments provide matching funds to invest in up to $5,000 per dwelling on energy efficiency upgrades and/or solar PV installations for the roughly 319,853 State owned and managed public and Indigenous Housing Total costs $1.51 billion.
  2. Community housing– Federal and state/territory governments provide matching funds to invest up to $10,000 (with a matching contribution) per dwelling on energy efficiency upgrades and solar PV installations for the roughly 117,865 community and Indigenous community housing dwellings. Total cost: $923 million.
  3. Low-income home owners– The Federal Government provide funds to be managed by third party to implement energy efficiency audits, upgrades and/or solar PV installations for up to $5,000 per dwelling, for the roughly 1.1 million owner-occupier on the lowest 20% of incomes. Total cost $4.87 billion.
  4. Inefficient rental properties – The Federal Government provide funds to be managed by third party to provide free energy audits on private rental properties built before 5 star ratings were introduced, and provide up to $5,000 for energy efficiency and/or solar installation for qualifying poor performing rental properties targeted at low-income renters (Should be implemented in conjunction with mandating energy efficiency standards for rental properties). Total cost $1.8 billion.
  5. Low-income appliance replacement offer – Governments provide subsidies for low-income households to replace inefficient appliances. Not costed.

The energy productivity measures would include (but are not limited to): reverse cycle air conditioners for heating and cooling; more efficient hot water (heat pumps); draught sealing; ceiling fans; efficient thermal building envelope; lighting; shade structures, and roof top solar.